aamc.org does not support this web browser. Learn more about the browsers we support.

New section

Content Background

New section

MedPAC Discusses Separately Payable Drugs, Rural Access to Care, APMs

March 5, 2021

New section

New section

Phoebe Ramsey, Sr. Regulatory Analyst, Quality & Payment Policy
Mary Mullaney, Director, Hospital Payment Policies
Brad Cunningham, Sr. Regulatory Analyst, Graduate Medical Education
Ki Stewart, Policy and Regulatory Analyst

The Medicare Payment Advisory Commission (MedPAC) met on March 4 and 5 to discuss separately payable drugs under the Outpatient Prospective Payment System (OPPS), rural access to healthcare, alternative payment models (APMs), and the Skilled Nursing Facility (SNF) Value-Based Purchasing (VBP) Program. MedPAC also discussed the current indirect medical education payment policy (see related story).

OPPS Payment for Separately Payable Drugs

The MedPAC staff revisited the discussion of changes to Medicare payments for separately payable drugs under the Outpatient Prospective Payment System (OPPS). Under the chairman’s draft recommendation, the OPPS pass-through drug policy would be modified so that only drugs and biologics that are clinically superior to their packaged alternatives would be paid separately. The commissioners unanimously supported the draft recommendation.

Rural Access to Care

The MedPAC staff presented its findings for a congressionally-mandated study on Medicare beneficiaries’ access to care in rural areas. In 2020, the House Committee on Ways and Means made a request to the commission to update the commission’s 2012 report on rural beneficiaries’ access to care. MedPAC evaluated 2018 data to update the report on rural utilization of hospital inpatient use, trends in rural urban hospital utilization, and the effects of rural hospital closures on access to care.

MedPAC’s most recent survey data suggested similar satisfaction with access to care between rural and urban beneficiaries and did not report significant differences in delaying or foregoing care. As rurality increases, respondents noted that there is more difficulty in accessing specialists and facilities open on nights and weekends. There is similar inpatient use and higher use of Hospital Outpatient Departments (HOPD) per beneficiary in rural areas compared to urban areas. Rural beneficiaries had fewer evaluation and management service (E&M) encounters than urban beneficiaries and traveled further to see both specialist and primary care physicians. Commission staff also found that there were large declines in inpatient admissions prior to rural hospital closure.

The commission previously recommended the creation of freestanding rural emergency departments to address many of the rural access issues. The new policy under the Consolidated Appropriations Act, 2021 (P.L. 116-260) created a new category of hospital beginning in 2023 called a rural emergency hospital. Rural emergency hospitals will not perform inpatient services and must have a dedicated emergency department. Medicare will pay the facility a fixed monthly payment.

The commission will have an interim report due in June 2021 with a final report due in June of 2022.

Alternative Payment Models

The MedPAC staff reported on the current state of Centers for Medicare and Medicaid Services (CMS) Alternative Payment models (APMs), finding that all three categories of APMs - accountable care organizations (ACOs), episode-based payment models, and primary care transformation models - have shown limited to no improvements in quality of care or cost reduction when factoring in performance payments. The MedPAC staff attributed this lack of success to several barriers, including providers who may continue to focus on maximizing utilization, complicated incentives, costly infrastructure improvements, and selection bias of voluntary models.

The MedPAC staff emphasized that the lack of success may be attributed to the large quantity of models available and the conflicting incentives that arise from participating in multiple models. For example, providers participating in multiple APMs can dilute each model’s incentives because each model may present providers with differing financial incentives and operational requirements. Performance payments from one model may increase total spending in another model, making it more difficult to achieve savings relative to a spending target. Lastly, contaminated comparison groups may reduce the likelihood of isolating the impact of each model. The staff noted that it is difficult to accurately assess impact of a given model on spending and quality if providers are in multiple models or if the comparison group is participating in other similar models.

To address these issues and improve APMs, the commissioners discussed and overwhelmingly approved the merits of the draft recommendation that CMS should implement a more coordinated portfolio of fewer APMs that support objectives of reducing spending and improving quality.

SNF VBP Program

The MedPAC staff presented its findings for a mandated evaluation of the current SNF VBP Program. The commissioners discussed a draft recommendation to replace it with a new SNF Value Incentive Program (VIP), similar to the design of the previously recommended Hospital-VIP [see Washington Highlights, March 22, 2019].

The SNF VIP would be funded by a payment withhold and would distribute financial rewards and penalties to SNFs based upon a small set of performance measures. Similar to the Hospital VIP, scoring would use a peer grouping mechanism to account for differences in patient social risk factors. The draft recommendation also included a directive to the Department of Health and Human Services (HHS) to develop and report patient experience measures for SNFs.

The commissioners expressed interest in further evaluation of a different approach accounting for social risk factors by adjusting payments up front, rather than on the back-end through measuring outcomes in a performance incentive program. Upfront payments may provide a greater incentive to invest in care delivery changes to improve outcomes for patients with social risk factors. The Commission will continue to discuss the merits of a new SNF VIP and finalize a recommendation during the April 2021 public meeting for inclusion in the June 2021 report to Congress.

New section

New section